Data delivers mixed economic tidings

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Economic and financial data released yesterday show business conditions were slowing even before the Reserve Bank's latest interest rate rise.Photo: Robert Rough

Economic signals continued to be mixed yesterday in a handful of
private surveys that indicated slowdowns in consumer spending, home
renovations and newspaper job advertisements, but rising price
pressures.

The quarterly D&B Business Expectations Survey revealed that
sales and profits had dipped and selling prices had increased to
their highest levels in almost two years.

The D&B study, of 1200 business owners and executives, found
that 48 per cent of manufacturers of durables such as furniture,
electrical fittings and machinery were expecting to lift their
prices in the June quarter.

Christine Christian, chief executive officer of D&B
Australia and New Zealand, said business conditions appeared to
have reached a "tilting point" after 14 years of extended
growth.

While expectations remained healthy and the risk of recession
was not an issue at this stage, the findings suggested the economy
and consumer confidence were coming off the boil.

"Sales and profit actuals indicate that businesses did not enjoy
the strong Christmas trading they had anticipated and show that the
economy may have been starting to cool by itself," Ms Christian
said.

"This is supported by the fact retailers reported actual profits
which were more than 30 points below expectations and sales which
were more than 20 points below."

The D&B figures pre-date last week's 0.25 per cent rise in
interest rates.

More data released yesterday suggested that concerns about
rising interest rates and higher building costs resulting from
skills shortages and compliance costs had dragged the renovation
market to its lowest point in two years.

Figures from the Housing Industry Association's Renovations
Monitor, which also pre-date the rate rise, showed that renovation
activity fell 28.6 per cent to $881 million in the December
quarter.

Business conditions have reached a tilting point after 14 years of growth.CHRISTINE CHRISTIAN, D&B

This was 16 per cent lower than the figures from 12 months ago
and follows two years of strong growth.

HIA chief economist Simon Tennent said the data confirmed that
the industry and economy were slowing late last year.

"Last week's interest rate rise will clearly keep a lid on any
expected bounce in this current quarter but of deeper concern is
the continued rise in compliance costs brought about by skills
shortages and increasing compliance costs," Mr Tennent said.

The ANZ job advertisements series showed the number of job ads
in major metropolitan newspapers slipped 0.6 per cent in February
to an average of 22,085 per week, the lowest level since
September.

The number of jobs advertised on the internet, however,
increased 6.4 per cent to an average of 131,552 a week - the
biggest monthly rise since July 2003.

Rising petrol prices and the slowdown in the housing market
appear to have limited spending growth in the last three
months.

The Cashcard Retail Activity Index revealed consumer spending
grew 1.5 per cent in February to a reading of 124.2.